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March 16, 2009
 

dollar boatIs This The Bottom?

The last six months have seemed like one miserable groundhog day after another: gloom, doom, and not much hope of springtime.

While the economy is bad, there is some brightening on the horizon. First off, we are hearing from many of our customers that after tightening their belts, the sky hasn't completely fallen. Sales are generally off 30% or so. For many retailers, while this is bad news, it is not the last nail in the coffin.

Speaking as the owner of two retail stores in addition to our wholesale business, it seems like it's been a long slog. Our sales are off about 30%, which means my wife and I work a lot in the shops. We aren't really making any extra money, but we aren't closing up shop, either. And while it seems it's been like this forever, we can certainly go a while longer.

Roughly 2/3 of US GDP is derived from consumer spending. Without going too deeply into this, you can see that if people hold onto their wallets, not only are retailers affected, but likewise wholesalers and companies that provide services to retailers and wholesalers are adversely impacted.

The vast majority of people today are making the same amount they made last year, they're just not spending like they used to. And while we won't know for a while, it seems like there may be some crack forming in the ice.

Rebounding stock markets are a big help in creating consumer confidence. We've had a bona fide rally this past week, which if it sticks, should start to loosen purse strings a little.

Real estate in some key California markets is slowing picking up as bargain hunters enter the fray and banks begin to lend again. This is also a promising sign...

The US Administration has started talking in cautiously optimistic tones. Given Obama's track record of realism over irrational exuberance, this gives some credence to a more positive turn in the economy. Ben Bernanke, the chairman of the Federal Reserve, said yesterday that he sees the recession ending this year.

Finally, it seems like people have been living under a cloud for at least nine months, and though they may not rush out and buy a new car, a little something for themselves seems to be just what the doctor ordered.

I am sure that there will be plenty more bad news before we leave this recession behind us, but for the first time since the middle of last summer I am hopeful. If the bright spots in this article cheer you up, do us all a favor and spread the cheer to someone else.